Interim report 1 2024/25

Phase Holographic Imaging PHI AB (publ)

Lund, September 16, 2024

MAY 2024 – JULY 2024

Net sales1 338 (2 726) KSEK
Operating result before depreciation (EBITDA)-4 733 (-4 299) KSEK
Net result-5 929 (-4 299)  KSEK
Earnings per share-0.23 (-0.28) SEK
Gross margin83 (76) %

In Short

CEO Commentary

The first quarter of 2024 has so far been a period of steady course and strategic positioning for Phase Holographic Imaging. Most notably, PHI has been very active around the globe in forming important academic and sales partnerships during this summer and preparing for future growth.

Financial overview 

Sales for the first quarter of 2024 amounted to 1.3 million SEK, down from 2.7 million SEK during the same period last year. This decline is primarily attributed to our strategic focus on expanding our sales network and providing essential training to our new partners. Since our partnership with Altium began in November 2023, we’ve concentrated on onboarding and integrating new sales partners, which has been crucial for building a strong global presence.

Additionally, the period between the termination of some agents and distributors and the onboarding of new partners created a temporary gap in lead generation, further contributing to the short-term dip in sales. While this has impacted our immediate revenue stream, these efforts are necessary to secure long-term growth.

As we know from our sales cycles and processes, these strategic investments are expected to start delivering positive results later in 2024, driving sales growth, enhancing market presence, and supporting our continued expansion efforts.

Advancing clinical research with UCL 

In June, we entered a partnership with University College London (UCL), marking PHI’s entry into the realm of clinical research. Our HoloMonitor M4FL system is set to play a role in a clinical project at UCL, showcasing the potential of our QPI technology in hospital environments. 

These collaborations with renowned research institutions play a crucial role in driving our product development forward. They offer valuable insights into QPI technology, provide feedback from users, and assist us in identifying emerging market trends. By engaging with key opinion leaders across various research fields, we can align our innovations with the changing needs of clinical and regenerative medicine markets.  

Expanding market reach in Spain, Portugal and the Nordics

Another significant achievement was our entry into the Spanish and Portuguese markets, which was made possible by a subcontract between our global distribution partners Altium and Paralab. In addition, PHI bolstered its Nordic sales presence with a new distribution agreement between Altium and Kem-En-Tec Nordic. Our partnership with Altium and its recently appointed distributor partner manager, Daniel Soor, plays an important role in expanding PHI’s market presence. By establishing ourselves in these vibrant and competitive markets, we can better serve customers and increase the accessibility of our HoloMonitor technology.

Business development 

To expand PHI’s presence in the market, we applied for listing on the OTCQB Venture Market back in July. This action boosts our visibility in the U. S. and gives investors an additional avenue to trade our shares. The dual listing is expected to enhance liquidity and benefit shareholders while also aiding our progress in the fast-evolving sector of regenerative medicine. After receiving approval, we commenced trading on the OTCQB (OTCQB:PHIXF) on August 15th

During this quarter, we have seen some changes within our Board. After years of dedicated service, Leland Foster has decided to retire. Since joining us in 2012, Leland has been a pillar of our Board, providing invaluable guidance and leadership. Following our Extraordinary General Meeting in early September, we welcomed John Moore as our new Board member. Mr. Moore is a seasoned investor and entrepreneur with experience in the life sciences and energy industries. He currently holds positions as Chairman of two public life science companies and two private firms. We look forward to the fresh insights and expertise that John will bring to PHI.

Building for the future 

The most important milestones of the quarter have been about building a foundation for future success. Hence, investments in training and support have been made to prepare partners to represent HoloMonitor in the market competitively. Looking ahead, we will continue working on expanding our global distributor network, increasing academic collaborations, and leveraging our listing at OTCQB to achieve our mission of making PHI a leader in key non-invasive cell quality control technologies for regenerative medicine.

Lastly, I am grateful to our excellent team, the partners, and the stakeholders for having continued belief and commitment to our vision. All together, we are committed to working on the advancement of regenerative medicine. 

Patrik Eschricht, CEO

Additional reading for Q1 2024/25

About PHI

Phase Holographic Imaging (PHI), a leading medical technology company, develops and markets its non-invasive time-lapse imaging instruments for studying living cells.

The foundation of PHI’s current commercial HoloMonitor® products is Quantitative Phase Imaging (QPI) technology. This technology brings an innovative approach to real-time cell quality evaluation. It offers a detailed analysis of a large number of cell health and behavior characteristics without harming or influencing living cells and thus differing from conventional measurement methods, which often jeopardize cell integrity.

PHI is actively focusing on developing its business to expand from its current pre-clinical research market to the sizable healthcare industry and the emerging regenerative medicine field.

PHI envisions setting a new benchmark with QPI as a gold standard method for cell quality control, enabling regenerative treatments to advance and making future cell therapies safe, reliable, and economically and universally accessible for patients worldwide.

The addressable market

PHI has been active within the pre-clinical and biomedical cell research market, having established a global presence with HoloMonitor® systems and their scientific validation in both academia and industry, primarily addressing cancer, stem cell and drug development research.

PHI’s HoloMonitor technology is transforming pre-clinical research by providing a foundation for better cell models, which are critical before clinical drug testing. This innovative approach, utilizing Quantitative Phase Imaging (QPI), ensures cells remain unaffected during analysis. Unlike conventional cell measurement methods that often require genetic manipulation or staining with toxic substances, QPI offers a non-invasive alternative that maintains the integrity of cell cultures. This advancement addresses the critical need for accurate, cost-efficient preclinical data to reduce the high failure rates in drug development. With 9 out of 10 drugs failing in clinical trials due to ineffective results or adverse effects, largely stemming from flawed preclinical outcomes, PHI’s technology represents a significant leap forward. By enabling scientists to obtain better data without compromising cell health, HoloMonitor sets a new standard in drug development and basic medical research, aiming for more successful patient outcomes and reduced research expenses.

PHI is strategically prepared to extend its reach into the large clinical market and emerging regenerative medicine field, which presents significant growth opportunities. By striving to achieve Good Manufacturing Practice (GMP) standards and create a company quality management system (QMS), PHI aims to penetrate these markets in the future, where its non-invasive cell analysis solutions can offer critical cell quality control assessment.

Regenerative medicine is a groundbreaking field focused on developing methods to regenerate, repair, or replace damaged cells, tissues, or organs. It integrates biology, chemistry, computer science, and engineering to develop treatments for conditions previously thought untreatable. It has already begun to transform healthcare by offering new hope to patients with conditions like cancer, Parkinson’s disease, diabetes, and deafness, displaying its vast potential to improve and save lives around the globe.

Business model & strategy

PHI markets a competitive combination of sophisticated software and quality hardware, constantly evolving its offerings through in-house development in response to changing market needs. The production of the hardware and accessories is strategically outsourced to specialized subcontractors located in Sweden.

PHI’s business model strategically centers around the HoloMonitor portfolio, designed to meet the specific needs of academia and industry research labs. The company prioritizes direct interactions and live product demonstrations at potential customer facilities, particularly in cell-based research environments. Combined with a digital marketing approach, this sales strategy is essential for demonstrating HoloMonitor’s advantages firsthand, aiming to foster trust and enabling customers to assess its suitability for their unique research needs. The sales process at PHI is designed to align with the detailed and extended decision-making cycles often found within the scientific community. It accounts for the crucial phase of securing grant funding or other financial support for institutions looking to invest in new research equipment. As a result, sales cycles typically span 6 to 12 months.

PHI is actively expanding its global reach within its current core markets, such as North America, Europe, Asia, and Australia, while also exploring new territories. At the heart of this strategic expansion is the partnership with Altium, a major investor and global distributor of PHI. Altium’s engagement has been transformative for PHI’s operations, not only providing substantial financial backing but also significantly enhancing PHI’s market presence through Altium’s well-established sales channels and distribution networks. The joint efforts aim to broaden the geographic reach and adoption of the HoloMonitor system, utilizing targeted demonstrations and deeper market penetration to enhance sales performance and cash flow, positioning PHI as a key player in its field. This collaboration enables PHI to focus on its core expertise and innovation capabilities—advancing QPI technology and product development within regenerative medicine.

Achieving future goals

PHI is focusing on achieving important milestones in the coming years, utilizing the potential of its partnerships and collaborations. PHI has a clear focus on expanding its business to the clinical research market and positioning itself in the Regenerative Medicine field.

The collaboration with Altium is instrumental in PHI’s approach to gaining a stronger foothold in the regenerative medicine field, where PHI’s cell quality control technology can meet critical industry needs. PHI is also actively fostering alliances with leading institutions such as the Wake Forest Institute for Regenerative Medicine (WFIRM), renowned for its groundbreaking contributions to translating scientific research into clinical therapies. Collaborating with WFIRM enriches PHI’s initiatives, providing access to an exceptional ecosystem of expertise and innovation. This partnership bolsters PHI’s leadership in regenerative medicine, enabling the ongoing development and application of PHI’s cell quality control technology.

PHI engages in these strategic relationships to fortify the Company’s position as a thought leader in the field with the intention to accelerate progress, bolster market penetration, open new doors to new business opportunities, and enhance shareholder value.

Net Sales and Result

Net sales for the first quarter amounted to 1 338(2 726) KSEK and operating results before depreciation (EBITDA) to -4 733 (-4 848) KSEK. The net result amounted to -5 929 (-4 299) KSEK.

Investments

With an emphasis on regenerative medicine, the company invested 1 996 (2 265) KSEK in the product, patent, and application development during the period.

Financing

Cash, cash equivalents, and unutilized granted credits amounted to 267 (5 416) KSEK by the end of the period. PHI took a bridge loan in the amount of 7 000 KSEK. The equity ratio was -2 (27) %.

Warrants of series TO 4

Each warrant of series TO 4 entitles to subscribe for one (1) new share in PHI during the period from and including 12 September 2024 to and including 3 October 2024. The exercise price amounts to 70 % of the volume-weighted average price during a period prior to option redemption, within the interval 0.20 SEK as the lowest, and with 15.45 SEK per new share as the highest exercise price. Upon full exercise of warrants of series TO 4 at the highest exercise price (15.45 SEK per new share), the warrants will provide the company with approximately 20.8 MSEK before issue costs.

Convertibles

The convertible loan to Formue Nord Fokus A/S end of October 2023 amounted to 20 230 000 SEK with the following terms:

Altium acquired Formues Convertible loan

In November, Altium acquired the convertibles from Formue Nord A/S. On the takeover day, PHI had repaid 6 360 KSEK on the convertible loan including accumulated interest. The convertible loan net amount that Altium took over amounted to 17 841 KSEK and the number of outstanding convertibles to 1 449 277 new shares.

Risks

The company may be affected by various factors, described in the 2022/23 Annual Report. These factors may individually or jointly increase risks for the operation and result of the company.

Accounting Principles

The accounts are prepared in accordance with the Annual Accounts Act and general advice from the Swedish Accounting Standards Board BFNAR 2012:1 Annual accounts and consolidated accounts (K3).

Review

This interim report has not been subject to review by the company’s auditor.

Statements About the Future

Statements concerning the company’s business environment and the future in this report reflect the board of director’s current view of future events and financial developments. Forward-looking statements only express the judgments and assumptions made by the board of directors on the day of the report. These statements have been carefully assessed. However, it is brought to the reader’s attention that these statements are associated with uncertainty, like all statements about the future.

Calendar

About PHI

Phase Holographic Imaging (PHI) is a medical technology company that develops and markets its non-invasive, time-lapse imaging instruments for long-term quantitative analysis of living cells. The foundation of PHI’s current commercial HoloMonitor® products is Quantitative Phase Imaging (QPI) — a technology that heralds an innovative approach to cell quality evaluation. It offers a detailed analysis of cell characteristics without harming the cells, avoiding the limitations of traditional measurement methods. PHI is actively focusing on business development to expand from pre-clinical research to the clinical market and the emerging regenerative medicine field. PHI envisions transforming live cell analysis and establishing QPI as a standard for cell quality control, making our future cell therapies safe, affordable, and accessible for patients. PHI is based in Lund, Sweden, Boston, MA and Winston-Salem, NC.

On behalf of the Board of Directors
Patrik Eschricht, CEO

For additional information, please contact:
Patrik Eschricht
Tel: +46 702 69 99 61
E-mail: ir@phiab.com
Web: www.phiab.com

Consolidated – PHI Group

Income statement (KSEK)

  Q1 Q1 FY
  2024/25 2023/24 2023/24
Net sales1 3382 72610 510
Cost of products sold-234-665-3 071
Gross profit1 1042 0617 439
Gross margin 83% 76% 71%
 
Selling expenses-2 447-2 772-10 898
Administrative expenses-2 280-1 118-5 930
R&D expenses-1 499-1 732-7 554
 
Operating result (EBIT)-5 122-3 561-16 943
 
Financial net-807-738-3 232
 
Result before tax (EBT)-5 929-4 299-20 175
 
Net Result (EAT)-5 929-4 299-20 175

Balance sheet (KSEK)

  Q1 Q1 FY
  2024/25 2023/24 2023/24
ASSETS  
Non-current assets  
Intangible assets27 33621 06825 565
Tangible assets9415651 011
Total non-current assets28 27721 65826 729
 
Current Assets  
Inventory3 6504 3533 732
Short-term receivables3 42312 0912 374
Cash and equivalents113 416167
Total current assets7 08419 8606 273
 
Total assets35 36141 51833 002
 
EQUITY AND LIABILITIES  
Equity-71611 3984 944
Financial liabilities18 15720 58017 845
Operating liabilities17 9209 54010 213
 
Total equity and liabilities35 36141 51833 002

Changes in equity (KSEK)

  Q1 Q1 FY
  2024/25 2022/23 2023/24
Opening Balance4 9883 7283 728
Equity issues, net12 12022 617
Net profit-5 929-4 299-20 175
Translation difference224-151-1 182
Closing balance-71611 3984 988
Equity ratio-2%27%15%

Cash flow analysis (KSEK)

  Q1 Q1 FY
  2024/25 2023/24 2023/24
Operating activities   
Net result-5 929-4 299-20 175
Depreciation3898693 506
Translation difference59-315
Operating cash flow-5 480-3 429-16 984
  
Increase (-)/decrease (+) in inventories82-507621
Increase (-)/decrease (+) in operating receivables-1 049-6 6699 717
Increase (+)/decrease (-) in operating liabilities7 751-989629
Change in working capital6 784-8 16510 967
  
Cash flow from operating activities1 304-11 594-6 017
  
Investing activities   
Development expenses-1 996-2 240-9 055
Patents-25-109
Tangible assets
  
Cash flow after investments-692-13 859-15 181
  
Financing activities   
Net proceeds from equity issues22411 96813 765
Increase (+)/decrease (-) in borrowings312-2 735
  
Cash flow from financing activities53611 96811 030
  
Cash flow for the period-156-1 891-4 151
Cash and cash equivalents at the beginning of the period1675 3074 318
  
Cash and cash equivalents at the end of the period113 416167
Incl. unutilized credits 2675 416810

Data per share

  Q1 Q1 FY
  2024/25 2022/23 2023/24
Earnings per Share, SEK-0,23-0,28-0,81
Equity per share, SEK0,210,260,19
Number of Shares, end of period26 192 92520 452 70026 192 925
Average number of shares26 192 92520 452 70024 808 150
Share price end of period, SEK7,84,447,8

Parent company

Income statement (KSEK)

  Q1Q1FY
  2024/252023/242023/24
Net sales1 2952 3549 657
Cost of products sold-223-652-3 506
Gross profit1 0721 7026 151
Gross margin 83% 72% 64%
  
Selling expenses-1 193-1 546-5 877
Administrative expenses-2 280-1 118-5 929
R&D expenses-1 499-1 732-7 554
  
Operating result (EBIT)-3 900-2 694-13 209
  
Financial net-807-738-3 232
  
Result before tax (EBT)-4 707-3 432-16 441
  
Net Result (EAT)-4 707-3 432-16 441

Balance sheet (KSEK)

  Q1 Q1 FY
  2024/25 2023/24 2023/24
ASSETS  
Non-current assets  
Intangible assets25 41620 68923 986
Tangible assets9415651 011
Financial assets14 91610 10514 003
Total non-current assets41 27331 35939 000
 
Current Assets  
Inventory2 6743 8272 734
Short-term receivables3 10111 0852 242
Cash and equivalents3 01690
Total current assets5 77517 9285 066
 
Total assets47 04849 28744 066
 
EQUITY AND LIABILITIES  
Equity11 39419 20616 100
Financial liabilities17 84120 58017 841
Operating liabilities17 8139 50110 125
 
Total equity and liabilities47 04849 28744 066